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2010 National-Global Forecast

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38th Annual Economic Forecast Conference (Jan 14, 2010 - Seattle, WA). National/Global Economic Forecast by Ken Goldstein, The Conference Board.

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2010 National-Global Forecast

  1. 1. LONG TOUGH SLOW SLOG 2010 National Global Forecast Ken Goldstein WWW.CONFERENCE-BOARD.ORG 38 th Annual enterpriseSeattle Economic Forecast Conference January 14, 2010 -- Seattle, WA
  2. 2. Overview: 01/18/10 04:58 Page: <ul><li>Recovery Underway </li></ul><ul><li>Real Recovery This Spring – If Demand Recovers </li></ul><ul><li>Ditto Global economy </li></ul><ul><li>(-1.4% now – 3.5% in 2010) </li></ul><ul><li>Energy prices: Rising again </li></ul><ul><li>Housing market bottom </li></ul><ul><li>Post Recession  Dampened Expansion </li></ul>
  3. 3. WHAT IS NOT CHANGING 1) DEMOGRAPHICS 2) PRODUCTIVITY 3) PRICE/COST 4) INTERNATIONALIZATION 01/18/10 04:58 Page:
  4. 4. WHAT IS CHANGING 1) LOWER MPC 2) CAPITAL AVAILABILITY & COST 3) MORE REGULATION 4) HIGHER TAXES 01/18/10 04:58 Page:
  5. 5. Global Economy Coming Back In 2010 Source: TCB, IMF, OECD, World Bank, Japan Center for Economic Research 01/18/10 04:58 Page:   2009 2010 2011         U S -2.5 2.3 1.8 Euro Area -4.1 0.6 1.0 Japan -5.3 0.8 1.7 Other Advanced Economies -2.4 2.1 1.9       Developing Asia (ex. China and India) 3.0 6.5 7.0 China 8.0 8.5 7.5 India 6.0 7.0 8.0 Latin America -0.5 2.5 4.0 Middle East 3.0 3.7 4.0 Africa 3.0 4.1 5.0       World Total 0.0 3.5 4.2
  6. 6. Momentum Shift THE CONFERENCE BOARD’S LEADING ECONOMIC INDEXES 01/18/10 04:58 Page:
  7. 7. All Regions Are Turning Up Notes: Shaded areas represent U.S. recessions Source: The Conference Board 01/18/10 04:58 Page:
  8. 8. US Consumers See Disappointing Job Growth 01/18/10 04:58 Page:
  9. 9. Dim Prospects For Jobs 01/18/10 04:58 Page:
  10. 10. Ever Dimmer For Incomes Sources: TCB, TNS Income Employment Dec ‘09 Expectations for Six Months Hence Percent (3MA), normalized scale
  11. 11. With Spending Power & Spending Flat Sources: BEA, BLS, TCB PCE - PERSONAL CONSUMER EXPENDITURE Notes: DPI - DISPOSABLE PERSONAL INCOME Rebate checks 01/18/10 04:58 Page:
  12. 12. SPENDING POWER WILL CONSISTENTLY RISE FASTER THAN SPENDING 01/18/10 04:58 Page:
  13. 13. HIGHER GAS PRICES DRIVE DEMAND FOR FUEL EFFICIENCY 01/18/10 04:58 Page:
  14. 14. SLOWER HOME CONSTRUCTION  SLOWER DEMAND FOR HOUSEHOLD GOODS 01/18/10 04:58 Page:
  15. 15. Progress, Slooow Progress 01/18/10 04:58 Page:
  16. 16. Optimistic scenario is hardly more optimistic, as downside risks dominate 01/18/10 04:58 Source: The Conference Board
  17. 17. IF PROFITS HOLD UP 01/18/10 04:58 Page:
  18. 18. LONG SLOOOW HOUSING RECOVERY 01/18/10 04:58 Page:
  19. 19. MATERIAL COST NOT A PROBLEM POST-RECESSION 01/18/10 04:58 Page:
  20. 20. DEMAND PUSH UP PRICE 01/18/10 04:58 Page:
  21. 21. NEUTRAL OUTLOOK FOR VOLATILE METAL 01/18/10 04:58 Page:
  22. 22. Losers and winners in manufacturing and services often the same 01/18/10 04:58 Page: Sources: BLS, The Conference Board Detroit Los Angeles Atlanta Birmingham Minneapolis Boston Philadelphia Baltimore Chicago Nashville Phoenix Kansas City St. Louis San Diego Miami Denver Seattle San Francisco New York City Dallas Houston
  23. 23. Service jobs decline less percentage-wise, but recovery may take longer 01/18/10 04:58 Page: Sources: BLS, The Conference Board Administrative services Recreation Professional services Construction Accommo-dations Other services Management services Financial services Mining Retail trade Wholesale trade Utilities Manufacturing
  24. 24. Wealth destruction phase Cresting Note: Shaded areas represent U.S. recessions. Sources: FRB, The Conference Board 01/18/10 04:58 Page:
  25. 25. MISSED MARKET SIGNAL: FIREWORKS NOT YET EXHAUSTED Dec‘09 Forecast S&P 500,PE ratio PE implied by 10-year Treasury Bonds PE ratio 01/18/10 04:58 Page:
  26. 26. Financing Gap: Danger Signal 01/18/10 04:58 Page:
  27. 27. Favorable Credit Conditions 01/18/10 04:58 Page:
  28. 28. -Disconnected Markets- Long Bond Yields Decouple From Changes In Energy Prices 01/18/10 04:58 Page:
  29. 29. Dollar Down Again 01/18/10 04:58 Page:
  30. 30. In A Panicky World 01/18/10 04:58 Page:

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